Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[thx1139]

【Dec.30.2022】The last update of this year Wish us all the best in 2023\Giga shanghai\4K \502 | WuWa (2 hrs ago)

The text describing the video on YT seems to indicate that vehicle production will be suspended all of January. Maybe just translation.

 

[FreqFlyer]

The text describing the video on YT seems to indicate that vehicle production will be suspended all of January. Maybe just translation.

Why? Covid? Demand? I skimmed through video and just heard horrible hold music ( and I like smooth jazz) , no words.

 

[mongo]

The text describing the video on YT seems to indicate that vehicle production will be suspended all of January. Maybe just translation.

Error in video description:

The downturn in the consumer market has also led to a reduction in production capacity in Shanghai, or even a shutdown, from December 25-January 1, Tesla's Shanghai factory completely shut down, and news that production will be suspended [resume] for 17 consecutive days from January 3 to January 19, 2023, followed by a suspension of production of electric vehicles between January 20 and January 31 [less per Tesla China, 2 days more than normal holiday], for a longer period than the Lunar New Year holiday (January 21-27) .

 

[sandervl]

Just some anecdotal evidence of the end of the year delivery rush. Picked up my MX Plaid today. Aside from some fit and finish issues it's a pretty good build.
Tesla recently leased a very large building in Holzgerlingen (near Stuttgart/DE) to serve as a delivery center. There were half a dozen Plaids ready for delivery plus 100-150 Model 3 & Y's standing inside. My guess is that they will try to deliver them today and tomorrow.

Car carriers were coming and going and there was a steady stream of customers welcomed by a friendly and young group of Tesla employees.

 

[StealthP3D]

So, what we're saying is that because of Tesla's over-performance in Model Y's sector the rules are being formed to handicap Tesla so that the lagging auto makers may come closer to being competitive.

I'm okay with that. We'll still kick butt even with the steeper hill to climb.

It isn't worth getting our knickers in a twist over this. Let's at least let the other kids feel good about themselves as they go bankwupt.

You just said you are comfortable with the government making new laws to handicap the most successful companies by using taxpayer funded programs to prop up the laggards so that under-performing companies can be more competitive. This rewards mediocrity and punishes excellence while making us all pay more.

Our economic system called capitalism works because it rewards the best solutions at the lowest costs. It allocates capital to companies that are efficient, companies that meet consumer needs in the best and most efficient manner are naturally encouraged to grow and expand while it encourages inefficient producers, those who have proven to not meet consumer needs in the most desirable and lowest cost manner to either improve or to leave the market to those companies with a proven ability to meet consumer needs efficiently. That is why competition is central to capitalism and its why capitalism is the only proven economic system to improve the standard of living of a society. Corrupt it and it fails to function properly.

I'm not sure you understand how undermining the foundation of competitive markets rigs the game and creates mediocrity, inefficiency and failure of the economic system as a whole while reducing economic prosperity for all. This is idiocy at it's finest and why I am so opposed to teaching kids in schools that everyone gets a first-place ribbon just for participating. That you don't need to actually perform to be rewarded. It's not reality and you can't build a productive society when mediocrity is rewarded over efficiency. It simply doesn't work.

Tesla is showing industry what has been lost over the years, why manufacturing jobs have moved to China, why nothing works anymore (reference Electrify America and other N. American EV charging networks) and why the middle class is being squeezed economically. Good intentions do not necessarily result in good results. People need to wake up and let capitalism work. There is nothing wrong with large companies going bankrupt, it would the result of their own malfeasance. Propping up companies that are no longer performing adequately does not make for a better society, it leads to economic sickness. How short-sighted can people be?

 

[ZeApelido]

You just said you are comfortable with the government making new laws to handicap the most successful companies by using taxpayer funded programs to prop up the laggards so that under-performing companies can be more competitive. This rewards mediocrity and punishes excellence while making us all pay more.

Our economic system called capitalism works because it rewards the best solutions at the lowest costs. It allocates capital to companies that are efficient, companies that meet consumer needs in the best and most efficient manner are naturally encouraged to grow and expand while it encourages inefficient producers, those who have proven to not meet consumer needs in the most desirable and lowest cost manner to either improve or to leave the market to those companies with a proven ability to meet consumer needs efficiently. That is why competition is central to capitalism and its why capitalism is the only proven economic system to improve the standard of living of a society. Corrupt it and it fails to function properly.

I'm not sure you understand how undermining the foundation of competitive markets rigs the game and creates mediocrity, inefficiency and failure of the economic system as a whole while reducing economic prosperity for all. This is idiocy at it's finest and why I am so opposed to teaching kids in schools that everyone gets a first-place ribbon just for participating. That you don't need to actually perform to be rewarded. It's not reality and you can't build a productive society when mediocracy is rewarded over efficiency. It simply doesn't work.

Tesla is showing industry what has been lost over the years, why manufacturing jobs have moved to China, why nothing works anymore (reference Electrify America and other N. American EV charging networks) and why the middle class is being squeezed economically. Good intentions do not necessarily result in good results. People need to wake up and let capitalism work. There is nothing wrong with large companies going bankrupt, it would the result of their own malfeasance. Propping up companies that are no longer performing adequately does not make for a better society, it leads to economic sickness. How short-sighted can people be?

Now waiting for the day @StealthP3D makes an entire page-long post Atlas Shrugged John Galt style.

 

[cliff harris]

Lots of talk about the model Y and will it/will it not entirely fit within the IRA but..

People... What about the cybertruck? Assuming the IRA is law at least through 2023-2024, then a BIG chunk of Tesla's production is likely to be Cybertruck. Thats the one that really matters?
Also, they can adjust the product mix to favor the models that DO suit the IRA. TBH I have long wanted Tesla to take more of an interest in the lower end variants of the model 3. We are still lacking a truly affordable car. Get that model 3 price down with front/rear castings and 4680s and demand for it will (I suspect) be rather good.

 

[TSLA Siempre]

Several people have posted facts that clarify these misconceptions. In short, avoiding repetitive posts:
1) parts costs, notably semiconductors, have been reducing,
2) shipping costs have been rapidly declining (this has a contra
-indication in port delays),
3) Production efficiencies from megacastings, structural packs, price reductions from CATL and other suppliers, with cheaper chemistries on roughly half the production volume,
4) ramping efficiencies from rampup of Grüneheide, Austin, Lathrup and suppliers,
5) Improving logistics efficiencies in deliveries.
Those topics just begin to outline reasons for lower prices, further;
Elon and Zach have repeatedly explained the the price rises since ~2021 have been to adjust for increasing component costs. As those have been decreasing recently price reductions follow. Do you not remember that?

All of those felicitous events have been happening, so choosing the timing of events to optimize benefits is absolutely a wise decision and,

It has been only in the last couple of months that all the efficiencies have been resulting in significant production increases,

Finally ‘everyone‘ seems to conveniently forget these:
1. ‘Free Supercharging’ is gone as a standard feature. Since 2018 it has been used as specific promotion incentives. That effectively reduces cost of sales by a large, albeit not precisely defined, and generates income rather than expense,
2. Premium Connectivity is now an option thus converting expense to revenue. Once people have passed the initial free period paid use has high adoption,
3.:Supercharger revenue from non-Tesla use generates more income, lessening negative P&L effect of Supercharger production and deployment.

There are more…and these ignore timing effects of various locations worldwide having tax and incentive changes taking effect in January. The US ones are obviously the most dramatic and consequential, but changes in major markets in Europe, China and elsewhere are also happening.

Put all those together and short term inventory reduction is a GOOD idea.

Lastly, the widely anticipated Model 3 and Model Y production modifications will reduce the cost of both.

Demand allegations are largely FUD.

Cost reductions are independent of demand. It may enable price reductions at the discretion of the manufacturer, but they could have also kept prices the same to enable larger gross margins with lower cost. Also, Elon on the twitter spaces call said that interest rates are crushing the auto market. That implies that there is reduced demand in the auto market. You may or may not agree that is the cause, but he is talking about demand. Every negative point isn't FUD.

 

[generalenthu]

MMD is not working out so well today. Stock continues to drift upward - different from rising price IMO. Drifting is like buoyancy when not being shorted so hard. (I'm making this sh** up.) It's the more natural behavior without MMD.

Shortz are weak is another read on it, greedy one's hanging on gonna get the hair treatment soon I think.

125 looks doable for today, 120 Max Pain still.

View attachment 890387

wow.. too many yolo traders betting on 125 break, which is unlikely to happen today imo. if anything there is a strong pull to the 120 pin for today. Would be a bullish sign if we close above 120 today, given the pin pressure to get there and negative macro. But then we are heading into a big news weekend.

These 0 days to expiry traders are the real junkies.

Edit: Volume is trending light too, at about 3/4th of the last couple of days. So options can move stock around a bit more.

 

[Ogre]

Seems like there is a little walking back on goals for Tesla here. Like retroactive “they didn’t say this year’s goal was 50% for _this_ specific year”. But they flat out did.

Q1 Earnings, Zach: “We continue to drive towards further strengthening of our financials in the second half of the year, and believe our 50% or above growth rate remains achievable for the year.”

Q2 (also Zach): “And finally, despite losing more builds in Q3 than expected, we're still pushing to reach 50% growth this year. This target has become more difficult but it remains possible with strong execution.”

Q3 (Zach): “As we look ahead, our plans show that we’re on track for the 50% annual growth in production this year, although we are tracking supply chain risks which are beyond our control.”


Tesla absolutely said 50% growth was on the table for the year. They said it at every single earnings call so far. I’m not sure why people are trying to walk this back. Missing an extremely ambitious goal during a particularly crappy macro environment isn’t the sort of problem I worry over, there is no need to try and walk back what they said.

If this was a failure in execution, I would be concerned, but it was just a monstrously tough macro environment. The big question is whether Tesla is in a good position to hit 50% in 2023 and onward. I believe they are. But trying to spackle over 2022 like they hit their targets just fine is very revisionist. It is like a giant corporate goal post move.



I will add an addendum to this. They haven’t missed it yet, and it may be that with the big surge in Tesla Energy they will actually hit it.

 

[WarpedOne]

so what?

 

[Ogre]

So now we also need to know the definition of MSRP. Is that base MSRP before options?

Might Tesla sell long range MY for 55K, but you have to pay extra to unlock the longer range? They did something similar in Canada as I recall.

The Canada clause was different. The just needed 1 model of the line to meet the criteria, so they “sold” that 1 model in very small numbers while the whole fleet benefited from the incentive.

If they did do a pay to unlock thing, I would suggest they make it a subscription so people could essentially finance the upgrade.

 

[InTheMiddle]

Seems like there is a little walking back on goals for Tesla here. Like retroactive “they didn’t say this year’s goal was 50% for _this_ specific year”. But they flat out did.

Q1 Earnings, Zach: “We continue to drive towards further strengthening of our financials in the second half of the year, and believe our 50% or above growth rate remains achievable for the year.”

Q2 (also Zach): “And finally, despite losing more builds in Q3 than expected, we're still pushing to reach 50% growth this year. This target has become more difficult but it remains possible with strong execution.”

Q3 (Zach): “As we look ahead, our plans show that we’re on track for the 50% annual growth in production this year, although we are tracking supply chain risks which are beyond our control.”


Tesla absolutely said 50% growth was on the table for the year. They said it at every single earnings call so far. I’m not sure why people are trying to walk this back. Missing an extremely ambitious goal during a particularly crappy macro environment isn’t the sort of problem I worry over, there is no need to try and walk back what they said.

If this was a failure in execution, I would be concerned, but it was just a monstrously tough macro environment. The big question is whether Tesla is in a good position to hit 50% in 2023 and onward. I believe they are. But trying to spackle over 2022 like they hit their targets just fine is very revisionist. It is like a giant corporate goal post move.



I will add an addendum to this. They haven’t missed it yet, and it may be that with the big surge in Tesla Energy they will actually hit it.

Completely agree. There is far too much "Tesla will miss their incredibly aggressive goals so we have to walk back their goals" and far too little "It's great that Tesla challenges itself with really aggressive goals so that even if Tesla falls a little bit short what they achieve is still really, really great!" We don't need to deny reality (of the past statements), we need to acknowledge and revel in reality (that the results are still great). To drive this home going forward, Tesla should make it clear that they are not going to provide a sandbagged forecast which can be easily exceeded (as many other companies do), but rather they will continue to push themselves with challenging targets because that's what will drive them to achieve as much as possible regardless of whether they hit it to the exact decimal point. Minor but very important nuance that I would like to see included in future guidance / forecasting from Tesla.

 

[insaneoctane]

The joke will be on them if tesla sells a Model Y AWD LR for under $55k to get the subsidy. They would break all kinds of sales records in the US and would crush ID4 (and other comparable EVs) sales. Especially if they offer a 2WD standard range for even less.

Someone more knowledgeable then me could figure out the profit margins at this price but I would assume it would still be about 30% (more when including and money they get for the 4680 batteries they use), which would be huge when selling at these potentially massive volumes.

But ultimately I agree, the IRA subsidy is needlessly complex and arbitrary. Unfortunately this his how the government likes to work.

I thought about this, and while AP and FSD are easy to add post-sale, Tesla needs room for time-of-sale margin enhancers like larger wheels, white seats, and paint colors. If only the base model qualifies, that punishes Tesla's margins...

 

[GBleck]

Looks like we will be trending down to $120 today to match the max pain price.

 

[Curt Renz]

Electrek - 12:02 pm ET:
Tesla announces upcoming launch of Model S and Model X in China

 

[StealthP3D]

Now waiting for the day @StealthP3D makes an entire page-long post Atlas Shrugged John Galt style.

I actually believe subsidies are a valuable way to compensate for external costs of fossil fuels (political instability, sickness and death from exhaust, sea-level rise and flooding, extreme and more frequent storms, etc.) but the subsidies need to be broadly and evenly applied, not gerrymandered to favor the least efficient competitors at the expense of the most efficient. The IRA is less about encouraging EV adoption and more about favoring the old guard who has fallen down on the job. Tesla has already proven beyond a reasonable doubt that EV's can be manufactured in great numbers at great profit. The primary reason legacy auto cannot is because they are fat and lazy, too many fingers are in the pie and they have forgot how to innovate faster, cheaper ways of doing things. We pay for it in the form of cars that are far too expensive even while the profits of those companies providing those cars remains very low.

We are at a stage of EV adoption where subsidies need to be shifted away from EV purchase/lease tax incentives towards tax incentives for businesses mining raw materials for batteries and making new battery factories. Also, funding for modernizing electrical grids and building EV charging networks. Unlike Ayn Rand, I do believe in subsidies to make consumer behavior more efficient. Capitalism works best when all external costs are accounted for. Medical care for people whose health has been impacted by breathing auto exhaust is not inexpensive and it's a burden we all pay for. Rising sea levels will cost much more. Capitalism's weakness is that it doesn't automatically account for costs that are external to economic activity but are the direct result of that activity.

We can fix that, but not by favoring the highest cost producers with the worst products. That just makes the problems worse over time.

 

[JRP3]

so what?

Facts still matter to some of us.

 

[insaneoctane]

Is it just me that finds a subsidy being applied because car A is heavier than car B? Should be the opposite, efficiency should be rewarded, base it on form factor/passenger/load capacity, but weight??

Especially since, by definition, the heavier, the larger the energy consumption /carbon footprint....for an "EV" subsidy. Typical, wasteful, counter-productive government...

 

[Knightshade]

Even if true, why are you harping about guidance ? Why haven't you fallen on your favorite petard when Tesla exceeded guidance ?

.... what?

Can you cite cases previous where you think your comment is reflected in anything I've said regarding previous years guidance in any year? ever? Or is this just another weird reflexive echo chamber thing like when people were (wrongly) attacking Troys #s by claiming his early estimates were always wrong in the opposite direction from the way they were actually wrong? (and once corrected on that moved the goalposts to maybe he's a short, and then once corrected on that moved them again to still be mad at him?)


Tesla guided, every quarter of 2022, for 50% or greater growth in 2022. Clearly and explicitly on every single earnings call. They are likely to miss that.

That's it. That's the whole thing.


Nobody's saying there aren't reasons for it- just that it's what happened, and trying revisionist history gymnastics that ignore what Zach and Elon actually, repeatedly, said doesn't help anyone.

(and I'll absolutely be first in line impressed AF and saying so here if they hit it anyway despite all the out-of-their-control headwinds- that would be simply amazing).

YMMV; I only expect guidance to be ballpark (how can it be otherwise ?)

You can of course expect anything you want.... but generally the market expects guidance, especially guidance the company explicitly repeats on every earnings call all year- to be fairly accurate- and reacts accordingly when it doesn't turn out that way. In fact referencing your initial remarks about previous years-- this issue is compounded by the fact Tesla has managed to meet or exceed guidance over and over in previous years, so the first time they don't do so will be viewed more significantly than it probably should be- and investors should probably be aware of that.

Tesla growing at "only" something in the mid or high 40% range is still phenomenal (and I specifically said so in the post you're jumping on here) but ignoring what was actually said on the earnings calls to make up a fake narrative about they "didn't really miss guidance at all!" is just as bad as the nonsense the Q folks make up to explain their own narrative and how they'll doubtless use a tiny miss to claim it's, how do the kids say it, a busted growth story?


We ought to be better than that, and much more firmly rooted in facts and reality.